Blockchain Technology DeFi and Tokenomics 1

Question 1

What does DeFi stand for in the context of blockchain?

Accepted Answer

Decentralized Finance

Answer

DeFi stands for Decentralized Finance, referring to financial services built on blockchain networks without traditional intermediaries.

Question 2

Which protocol pioneered the concept of Automated Market Makers (AMM) in DeFi?

Accepted Answer

Uniswap

Answer

Uniswap pioneered the AMM model using a constant product formula (x*y=k) to enable permissionless token swaps without order books.

Question 3

What is a liquidity pool in DeFi?

Accepted Answer

A collection of tokens locked in a smart contract to facilitate trading

Answer

A liquidity pool is a collection of two or more tokens locked in a smart contract that provides liquidity for decentralized exchanges.

Question 4

What is the primary purpose of a governance token in a DeFi protocol?

Accepted Answer

To allow holders to vote on protocol decisions

Answer

Governance tokens grant holders voting rights to propose and vote on changes to the protocol's parameters, upgrades, and treasury use.

Question 5

What is 'yield farming' in DeFi?

Accepted Answer

Providing liquidity or staking assets to earn rewards across protocols

Answer

Yield farming involves moving assets across DeFi protocols to maximize returns by earning trading fees, interest, or token incentives.

Blockchain Practice Test